CALGARY, Nov. 28, 2013 /CNW/ - ArPetrol Ltd. ("ArPetrol"
or the "Company") (TSXV: RPT) announces its financial and operating
results for the three and nine months ended September 30, 2013 and provides an operational
update on activities to date this year as well as an outlook for
the remainder of 2013. The Company's interim condensed consolidated
financial statements and management's discussion and analysis
(MD&A) for the reporting period have been filed on SEDAR at
www.sedar.com and posted on the Company's website at
www.arpetrol.com.
Summary for the Third Quarter 2013
Operating and Financial
As at September 30,
2013, ArPetrol had a working capital deficit of $4.5 million and has no long-term debt.
ArPetrol's third quarter production averaged 186 barrels of oil
equivalent per day (boe/d). This is a decrease of 55 boe per
day from the second quarter of 2013 and a decrease of 41 boe/d from
the third quarter of 2012. These decreases are due to natural
production declines and some yet unresolved well performance issues
in the third quarter of 2013.
The average realized natural gas price was
$3.95 per thousand cubic feet (Mcf),
$0.40 per Mcf higher than the price
realized in the second quarter of 2013 and $1.20 per Mcf higher than in the third quarter of
2012. This increase is due to a new natural gas sales contract
ArPetrol entered into during the second quarter. For natural gas
liquids (NGLs), average third quarter 2013 prices were $81.79 per barrel, $14.07 per barrel higher than in the second
quarter of 2013, and $9.80 per barrel
higher than in the same period in 2012. The changes in NGLs pricing
reflect commodity fluctuations in the Argentine market.
Processing revenues from third-party customers
increased significantly during the third quarter of 2013 with
revenues totalling $2,211,991.
This is more than double the $1,042,011 of processing revenue in the second
quarter of 2013 and well over double the $959,639 earned in the third quarter of
2012. The biggest contributors to the revenue increase are
the two new processing contracts which have been negotiated with an
effective date of July 1, 2013.
Under these new contracts, the price increased from $0.15 per Mcf processed, under the old contract,
to $0.30 per Mcf processed in the
third quarter. Increased processing volumes also contributed to the
revenue increase with third quarter throughput averaging 80.0
million cubic feet (MMcf) per day compared to 65.1 MMcf per day
processed during the second quarter of 2013 and 70.5 MMcf per day
for the third quarter of 2012. The increase in volumes was
due to resolution of third-party operational problems. The new
contracts are expected to continue delivering future fees in the
same range as realized in the third quarter, assuming there are no
maintenance issues at the plant or interruptions to processing
volumes.
Capital expenditures for the quarter were
$34,106. Net loss for the quarter was
$3,759,048 compared to a net loss of
$10,453,864 for the third quarter of
2012.
Summary of Results
|
|
|
|
|
|
|
|
|
(Cdn$ except shares outstanding
and per boe1 amounts) |
|
Three Months Ended
Sept 30, |
|
Nine Months Ended
Sept 30, |
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
Financial |
|
|
|
|
|
|
|
|
Production sales |
|
513,717 |
|
441,083 |
|
1,563,031 |
|
1,472,069 |
Processing sales |
|
2,211,991 |
|
959,639 |
|
4,381,509 |
|
3,101,593 |
Funds flow from (used in)
operations1 |
|
144,025 |
|
(982,464) |
|
(689,245) |
|
(2,615,899) |
Cash from (used in) operating
activities |
|
(3,541,000) |
|
(3,922,854) |
|
(1,793,743) |
|
(7,180,188) |
Comprehensive loss |
|
4,245,285 |
|
11,089,049 |
|
3,236,478 |
|
13,225,077 |
Fixed asset expenditures |
|
34,898 |
|
15,498,061 |
|
2,015,258 |
|
26,701,417 |
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
- basic and diluted 2 |
|
572,536,704 |
|
572,536,704 |
|
572,536,704 |
|
572,536,704 |
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Operations |
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Production |
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|
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|
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Natural gas - Mcf per day |
|
999 |
|
1,245 |
|
1,166 |
|
1,344 |
|
Natural gas liquids - bbls per day |
|
20 |
|
19 |
|
24 |
|
22 |
Total - boe per day1 |
|
186 |
|
227 |
|
219 |
|
246 |
Average sales price |
|
|
|
|
|
|
|
|
|
Natural gas - $ per Mcf |
|
3.95 |
|
2.75 |
|
3.41 |
|
2.83 |
|
Natural gas liquids - $ per bbl |
|
81.79 |
|
71.99 |
|
73.00 |
|
71.49 |
Operating netback |
|
|
|
|
|
|
|
|
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Production - $ per boe1 |
|
3.21 |
|
1.99 |
|
1.30 |
|
1.35 |
|
Processing - $ per Mcf processed1 |
|
0.18 |
|
0.06 |
|
0.10 |
|
0.06 |
Note 1: See advisories at the end of this news
release with respect to non-IFRS measures and boe presentation.
Note 2: All outstanding warrants, stock options
and convertible debentures were excluded in calculating the
weighted-average number of dilutive common share outstanding, as
they were determined to be anti-dilutive.
All values in this news release are in Canadian
dollars unless otherwise indicated.
Operational Update and Outlook
The Company recently concluded settlements
agreements with roughly half of its third-party contractors
representing settlement on $4.2
million of outstanding payables at September 30, 2013. Payments under the
settlement agreements will be made in November and December 2013.
ArPetrol continues its discussions with its
remaining third party contractors on past due amounts, and the goal
is to find mutually acceptable arrangements and payment schedules.
One contractor has initiated an arbitration proceeding in
Argentina to resolve its
outstanding payables, and the Company is evaluating that action and
its response. There is no certainty whether or not any other
contractors will pursue legal proceedings relating to outstanding
payables. There is continued uncertainty regarding the Company's
ability to continue to operate as a going concern (see the
financial statements and MD&A filed on SEDAR for complete
disclosure).
The Company has undergone a series of cost savings measures
since the beginning of August 2013
which is expected to reduce general and administrative expenses
going forward.
The Company elected not to extend the engagement of its
strategic advisor, however, management is continuing to investigate
several strategic opportunities that can impact future growth of
the Company. There is no certainty whether or not any of these
opportunities will be completed.
About ArPetrol Ltd.
ArPetrol is a Calgary-based publicly traded company engaged
in oil and natural gas exploration, development and production and
third-party natural gas processing in Argentina, where it owns and operates a gas
processing facility with capacity of 85 million cubic feet per day.
The Company's common shares are listed on the TSXV under the symbol
"RPT".
Non-GAAP Measures
This news release includes references to
financial measures commonly used in the oil and natural gas
industry. The terms "operating netback" (production sales and
processing sales less royalties, turnover taxes and operating
expenses) and "funds flow from operations" (cash generated from
operating activities before changes in refundable Argentinean
taxes, foreign exchange on non-cash working capital, non-cash
working capital, and translation adjustment on operating items) do
not have any standardized meaning under International Financial
Reporting Standards (IFRS), which have been incorporated into GAAP,
and may not be comparable with similar measures presented by other
companies. Funds flow from operations should not be considered an
alternative to, or more meaningful than, cash generated from
operating activities, net loss or other measures determined in
accordance with IFRS, as an indicator of the Company's
performance.
See the MD&A for the three and nine months
ended September 30, 2013, filed on
SEDAR at www.sedar.com and on the Company's website, for further
discussion, including a reconciliation of funds flow from
operations to cash generated from operating activities which is the
most directly comparable measure calculated in accordance with
IFRS. There is no IFRS measure that is reasonably comparable to
operating netback and a detailed calculation of such netbacks is
presented in the MD&A for the three and nine months ended
September 30, 2013.
Boe Presentation
Production information is commonly reported in
units of barrels of oil equivalent (boe). For purposes of computing
such units, natural gas is converted to equivalent barrels of oil
using a conversion factor of six thousand cubic feet (Mcf) to one
barrel (bbl). This conversion ratio of 6:1 represents energy
equivalency, which is primarily applicable at the burner tip, and
does not represent a value equivalency at the wellhead. Such
disclosure of boe may be misleading, particularly if used in
isolation.
Forward-Looking Information
This news release contains certain
forward‐looking statements relating, but not limited, to
operational information, the ability to maintain processing rates
and revenue in the same range as realized in the third quarter, the
ability to negotiate settlement agreements with the remaining
service providers and extend payment schedules until a long-term
solution for the Company can be achieved, the ability to reach
final agreement with one third party on one of the new gas
processing contracts under which the company has received payment
based on the new terms, the ability to reduce future expenses, and
the ability or inability to continue as a going concern.
Forward‐looking information typically contains statements with
words such as "anticipate", "believe", "expect", "plan", "intend",
"estimate", "propose", "project", or similar words suggesting
future outcomes. The Company cautions readers and prospective
investors in the Company's securities not to place undue reliance
on forward‐looking information as, by its nature, it is based on
current expectations regarding future events that involve a number
of assumptions, inherent risks and uncertainties, which could cause
actual results to differ materially from those anticipated by the
Company.
Forward-looking information is based on
management's current expectations and assumptions regarding, among
other things, the willingness of remaining creditors to settle
outstanding amounts or extend payment schedules, future operations
and transactions, the pursuit of strategic alternatives, future
capital and other expenditures (including the amount, nature,
timing, availability and sources of funding thereof), stable
processing volumes, future production and processing revenue,
future economic conditions, future currency and exchange rates,
future pricing, the ability to repatriate funds, continued
political stability in the areas in which the Company is operating,
the reduction of G&A and expenses, and the Company's continued
ability to obtain and retain qualified management and staff and
equipment in a timely and cost-efficient manner. Although the
Company believes the expectations and assumptions reflected in such
forward‐looking information are reasonable, they may prove to be
incorrect.
Forward‐looking information involves significant
known and unknown risks and uncertainties. A number of factors
could cause actual results to differ materially from those
anticipated by the Company, including but not limited to
uncertainty regarding the willingness of third parties to negotiate
alternative contractual arrangements and payment schedules,
uncertainty regarding the outcome of the arbitration proceeding
initiated by the creditor in Argentina and the cost of same, uncertainty
whether any other creditors will commence legal proceedings and the
costs of same, the risk that a new gas processing agreement will
not be executed by the second counterparty, risks associated with
the oil and natural gas industry (e.g., operational risks for its
producing assets risks inherent in future drilling programs and the
operation of the gas plant, and health, safety and environmental
risks), the ability to retain management and staff, the inability
to access funding and continue as a going concern, difficulties
that may be encountered to repatriate funds, weather-induced delays
and natural disasters, interruptions to production and processing
revenue, production declines, the uncertainty regarding future
revenues, union activities and labour issues in Argentina, change in government policies, the
risk of commodity price changes, the risk of foreign exchange rate
fluctuations (which may not be as favourable as those currently
experienced), currency controls and a change in the manner and
rates at which the Company is exchanging currency, the risk that
the Corporation will not be able to effectively reduce expenses,
and risks associated with international activity and political
risks over which it has no control (including risks related to the
general economic and business conditions in Argentina, economic, social or political
instability or change, the uncertainty of negotiating with foreign
governments, expropriation and/or nationalization, changes in
export or exchange policies, adverse determinations or rulings by
governmental authorities, and changes in energy policies or in the
personnel administering them).
The forward‐looking information included herein
is expressly qualified in its entirety by this cautionary
statement. The forward‐looking information included herein is made
as of the date hereof and the Company assumes no obligation to
update or revise any forward‐looking information to reflect new
events or circumstances, except as required by law.
Additional information relating to the Company
is also available on SEDAR at www.sedar.com.
AR Petrol's head office address is 700, 815 8
Avenue S.W., Calgary, AB T2P
3P2
Neither the TSXV nor its Regulation Services
Provider (as defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
SOURCE ArPetrol Ltd.